Pharma Stocks Rise Despite Trump's Tariff Announcement; IIFL Capital Sets ₹1500 Target for Entero Healthcare, Predicting 29% Upside.
Pharma Stock: Following US President Donald Trump's announcement of a 26% tariff on Indian goods, the Indian stock market experienced a downturn. However, pharmaceutical company stocks witnessed a significant surge. This was because pharmaceutical products were excluded from the Trump administration's reciprocal tariffs. This positive impact resulted in a 4.9% increase in the Nifty Pharma index, reaching a high of 21,996.6. In this environment, brokerage firm IIFL Capital has recommended buying the pharma stock Entero Healthcare.
Strong Brokerage Recommendation for Entero Healthcare
IIFL Capital has maintained its 'BUY' rating on Entero Healthcare, setting a target price of ₹1500. This represents a potential upside return of 29% from the current level. According to the brokerage, Entero Healthcare is one of the largest and fastest-growing pharmaceutical distribution platforms in India's highly fragmented drug distribution market.
Recent Share Performance
Looking at the share's performance, it is currently trading 27% below its 52-week high. The stock has declined by 16.06% in the last three months and 14.86% in the last six months. However, over a one-year period, the share has delivered a positive return of 17.91%. The stock's 52-week high is ₹1,583, and its 52-week low is ₹986. Currently, the company's total market cap on the BSE is ₹5,111.94 crore.
Entero Healthcare's Growth Potential
According to the brokerage report, the combined market share of India's three major healthcare product distributors – Kimeda, Pharmeasy, and Entero – is currently between 8-10%, which could increase to 20-30% by 2027-28. The main reason cited is the rapid consolidation happening in the total addressable market (TAM) of ₹3.3 lakh crore and a compound annual growth rate (CAGR) of 10-11%.
Entero Healthcare's Strategy and Business Model
Entero Healthcare's model differs from its competitors as it provides not only demand fulfillment but also commercial solutions for manufacturers. This positions it for significant potential in the drug distribution sector. IIFL Capital estimates that Entero Healthcare's revenue will grow at a CAGR of 24% between FY2024-25 and FY2027-28. This includes 16.5% growth from organic revenue (1.5-2 times the average growth of the Indian pharma market) and the remaining 8-8.5% annual growth through acquisitions.
Brokerage Advice for Investors
IIFL Capital advises investors to invest in Entero Healthcare, describing it as a b growth stock. The brokerage believes this stock can provide good returns in the long term. However, investors should make their decisions keeping in mind market fluctuations and risk factors.
